194 CHAPTER 4 Statement of Cash Flows 4.10. The following income statement and balance sheet information are available for two firms, Firm A and Firm B. (a) Calculate the amount of dividends Firm A and Firm B paid using the information given. (b) Prepare a statement of cash flows for each firm using the indirect method. (c) Analyze the difference in the two firms. Income Statement for Year Ended December 31, 2015 Firm A $1,000,000 700,000 300,000 Firm B $1,000,000 700,000 300,000 Sales Cost of goods sold Gross profit Other expenses Selling and administrative Depreciation Interest expense Earings before taxes Income tax expense Net Income 120,000 10,000 20,000 150,000 75,000 75,000 115,000 30,000 5,000 150,000 75,000 75.000 $ $ Changes in Balance Sheet Accounts December 31, 2014, to December 31, 2015 Firm A Firm B S Cash and cash equivalents Accounts receivable Inventory Property, plant, and equipment Less accumulated depreciation Total Assets Accounts payable Notes payable (current) Long-term debt Deferred taxes (noncurrent) Capital, stock Retained earnings Total Liabilities and Equity 0 +40,000 +40,000 +20,000 (+10,000) $ +90,000 $-20,000 +17.000 +20,000 +3,000 $+10,000 +5,000 - 10,000 +70,000 (+30,000) $+45,000 $ -5,000 +2,000 -10,000 +18,000 +70,000 $ 190,000 +40,000 $+45,000